Penn West Energy Trust
Encyclopedia
Penn West Exploration is a Canadian oil and natural gas
company based in Calgary, Alberta, one of the S&P/TSX 60
, the sixty largest companies on the Toronto Stock Exchange
. Until the end of 2010 it was one of the companies known as "Canroys" (a shortened form of "Canadian royalty trust"). With a market capitalization in January 2008 of approximately US $9.5 billion, it was the largest oil and gas energy trust in North America.
Penn West Energy Trust was previously an independent exploration and production company named Penn West Petroleum Ltd. In May 2005 it converted into an energy trust
, an entity which pays the majority of its earnings directly to shareholders (known as "unitholders" in a trust), in the form of dividends. Penn West has acquired several other trusts since reorganizing as a trust in 2005: Vault, Canetic, and Petrofund. These acquisitions made it the single largest energy trust on the continent.
Penn West's oil and gas fields are distributed throughout the Western Canadian Sedimentary Basin
, a region which is one of the world's largest petroleum reserves. Production comes from three main areas, the "Northern", "Central", and "Plains", areas which stretch from northeastern British Columbia
, southeast across central Alberta to southern Saskatchewan
, and then along the U.S. border to the border with the province of Manitoba
. Penn West projects a production of 200000 to 210000 bbl (31,797.5 to 33,387.3 m3) equivalent per day throughout 2008, and claims a reserve lifetime of 10.2 years as of December 31, 2006, on the known and probable reserves of 482.8 Moilbbl equivalent throughout their holdings. Of their output, a total of 44% has been natural gas, with oil and NGL
s accounting for the remaining 56%. In addition, Penn West maintains a project to recover heavy oil from the Peace River Oil Sands.
Penn West Energy Trust pays a high dividend, yielding an annual rate of between 15 and 16% in early 2008; in addition, it pays out monthly, a relative rarity for equities listed on the New York Stock Exchange. Since the Trust's assets are considered a depletable resource, its dividend payments are not taxed at the regular dividend rate, but rather as return of capital instead of return on investment. This is an additional tax advantage in the United States, and applies to all royalty trusts.
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
company based in Calgary, Alberta, one of the S&P/TSX 60
S&P/TSX 60
The S&P/TSX 60 Index is a stock market index of 60 large companies listed on the Toronto Stock Exchange. Maintained by the Canadian S&P Index Committee, a unit of Standard & Poor's, it currently exposes the investor to ten industry sectors....
, the sixty largest companies on the Toronto Stock Exchange
Toronto Stock Exchange
Toronto Stock Exchange is the largest stock exchange in Canada, the third largest in North America and the seventh largest in the world by market capitalisation. Based in Canada's largest city, Toronto, it is owned by and operated as a subsidiary of the TMX Group for the trading of senior equities...
. Until the end of 2010 it was one of the companies known as "Canroys" (a shortened form of "Canadian royalty trust"). With a market capitalization in January 2008 of approximately US $9.5 billion, it was the largest oil and gas energy trust in North America.
Penn West Energy Trust was previously an independent exploration and production company named Penn West Petroleum Ltd. In May 2005 it converted into an energy trust
Royalty trust
A royalty trust is a type of corporation, mostly in the United States or Canada, usually involved in oil and gas production or mining. However, unlike most corporations, its profits are not taxed at the corporate level provided a certain high percentage of profits are distributed to shareholders...
, an entity which pays the majority of its earnings directly to shareholders (known as "unitholders" in a trust), in the form of dividends. Penn West has acquired several other trusts since reorganizing as a trust in 2005: Vault, Canetic, and Petrofund. These acquisitions made it the single largest energy trust on the continent.
Penn West's oil and gas fields are distributed throughout the Western Canadian Sedimentary Basin
Western Canadian Sedimentary Basin
The Western Canadian Sedimentary Basin is a vast sedimentary basin underlying of Western Canada including southwestern Manitoba, southern Saskatchewan, Alberta, northeastern British Columbia and the southwest corner of the Northwest Territories. It consists of a massive wedge of sedimentary rock...
, a region which is one of the world's largest petroleum reserves. Production comes from three main areas, the "Northern", "Central", and "Plains", areas which stretch from northeastern British Columbia
British Columbia
British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
, southeast across central Alberta to southern Saskatchewan
Saskatchewan
Saskatchewan is a prairie province in Canada, which has an area of . Saskatchewan is bordered on the west by Alberta, on the north by the Northwest Territories, on the east by Manitoba, and on the south by the U.S. states of Montana and North Dakota....
, and then along the U.S. border to the border with the province of Manitoba
Manitoba
Manitoba is a Canadian prairie province with an area of . The province has over 110,000 lakes and has a largely continental climate because of its flat topography. Agriculture, mostly concentrated in the fertile southern and western parts of the province, is vital to the province's economy; other...
. Penn West projects a production of 200000 to 210000 bbl (31,797.5 to 33,387.3 m3) equivalent per day throughout 2008, and claims a reserve lifetime of 10.2 years as of December 31, 2006, on the known and probable reserves of 482.8 Moilbbl equivalent throughout their holdings. Of their output, a total of 44% has been natural gas, with oil and NGL
Natural gas processing
Natural-gas processing is a complex industrial process designed to clean raw natural gas by separating impurities and various non-methane hydrocarbons and fluids to produce what is known as pipeline quality dry natural gas.-Background:...
s accounting for the remaining 56%. In addition, Penn West maintains a project to recover heavy oil from the Peace River Oil Sands.
Penn West Energy Trust pays a high dividend, yielding an annual rate of between 15 and 16% in early 2008; in addition, it pays out monthly, a relative rarity for equities listed on the New York Stock Exchange. Since the Trust's assets are considered a depletable resource, its dividend payments are not taxed at the regular dividend rate, but rather as return of capital instead of return on investment. This is an additional tax advantage in the United States, and applies to all royalty trusts.